Friday, July 15, 2016

Economics of choosing to live stream a Broadway show is attempting to become like a Broadway version of Netflix.  But in late June they did something that had never been done before - they live-streamed She Loves Me, a current Broadway show.

She Loves Me was a hit show that had always planned to only have a limited run, and indeed it closed on July 10th.  BroadwayHD charged $9.99 to watch the show live on Thursday, June 30.

The economics behind the decision of the producers of She Loves Me to stream is fascinating.  So what are the pros for a show choosing to live stream?
  1. It brings in extra immediate revenue (the $9.99*# of viewers)
  2. It brings in possible future revenue for the BroadwayHD site (which perhaps pays extra to She Loves Me for this?)
  3. It will likely be seen by hundreds of people who run high school, college, and community theatre musicals who might choose to this show.  To use/perform a show, you must pay for the rights, which is a (sometimes significant) source of revenue for shows.
  4. It could bring in extra revenue to the show - if people seeing the show on the stream then want to see it in person.  I.e., extra revenue if the live-stream and ticket sales are complements. (Although I don't think this is likely given its only open for a limited amount of time.)

What are the cons of choosing to live stream?
  1. Is watching a video of a Broadway show a substitute for seeing the show live?  If so, then the live-stream could hurt ticket sales on Broadway.  Similar to point four above - this doesn't seem to matter as much when the show only has a handful of performances left.
  2. Would showing a live-stream hurt the sales of a show that is hoping to tour?    
  3. How expensive is it to produce the broadcast?

Overall, it seems like the optimal decision here from a theatre producer's perspective is to live-stream but only at the very end of a run - and only if they think it is unlikely to do a national tour.  

Read what others have written about live-streaming Broadway shows here, here, and here.

Saturday, May 21, 2016

Some economic thoughts on London

I'm in London right now.  I've been here for about a week leading a study-abroad trip.  It's been great overall, although unfortunately one student has been quite ill.  (She is getting better, thankfully.)

Some thoughts about London (and beyond London):

* Differences in the exchange rate makes a big difference to London's affordability.  The rate now is about 1.45 dollars/pound vs. 1.60 when I spent four months here in 2012.  But that means everything is about 10% cheaper.  Mentally it seems like London is much more affordable.

* London is expensive, but it only seems more expensive than central Pennsylvania for three reasons: housing is expensive, food at restaurants is expensive, and drinks at restaurants are expensive.  Entertainment, tours, clothing, etc. seem no more expensive than the states.

* West End theatre tickets are less expensive than Broadway.  And it isn't close.  For the cheapest ticket to Funny Girl - I paid 25 pounds.  That converts to about $36.  To compare - I bought a cheap ticket to a musical for June in New York called Waitress - that ticket was about $70.

* The tube is fantastic.  Public transportation only makes sense with a critical mass of people - but it is awesome when you have that.  It is just so convenient.  I recall hearing that the London transportation system (buses, tube, etc.) loses money.  But that's actually OK, as they would have spent some money on roads anyway without this system.

* Cambridge is a lovely city, and punting is fun!

Some pictures

Thursday, May 5, 2016

Elaborating on the amount Hamilton ticker resellers make

I was quoted in this Bloomberg story as saying:

At least $30,000 from every show goes to ticket resellers instead of the musical’s investors, producers and cast, according to Matt Rousu, an economics professor at Susquehanna University. With eight shows a week, that comes out to $240,000 every seven days, or almost $12.5 million a year filling the pockets of brokers, he said.

How did I come up with my estimate of $30,000?

Resale tickets rarely sell for less than $800 on ticketmaster.  Some sell for $1500-$2000.  The average price of a ticket from the Richard Rodgers Theatre is about $100-$200.  So that means we can conservatively estimate $600+ per resold ticket is going to resellers.

If you look at Ticketmaster, there are resale tickets available - and usually from 50-200 seats for sale for each show.

If you assume that just 50 tickets are sold on the resale market (likely way too low) and resellers are getting $600 per ticket (also low), you come up with an estimate of "at least $30,000" going to resellers.  In reality, it is probably much more.

Quoted in a Bloomberg story about the musical Hamilton

Link here

It starts:
The Broadway hit “Hamilton” is making millions. It could be making millions more if not for scalpers snapping up seats and hawking them for $2,000 a piece or more.

Tuesday, April 19, 2016

I'm presenting Thursday night ... Free and open to public

I'll be presenting a very brief (trying for 6 minutes) talk on Broadway Economics Thursday night.  The event is free and open to the public, and there are three other professors who will also present (again, in 6 minutes or less).

Here's the write-up distributed by the Honor's Program:
The Honors Program is hosting "360 Second Lectures" with Professor Ramsaran, Professor Kelsey, Professor Rousu, and Professor Viker.​ Join us for an evening featuring distinguished professors sharing their knowledge on various topics of their choice in hopefully under 360 seconds! The event will be held on Thursday, April 21 in Degenstein Meeting Rooms 1-3 at 7:30 PM.
Hope to see you there!

Friday, March 25, 2016

Malnutrition in Cuba

I came across this passage today (link here):
... access to food is the Cuban people’s most pressing daily preoccupation and that many come up so short that, according to the U.S. National Institutes of Health, malnutrition is the plurality cause for hospital admissions in Cuba (41 percent).